Precious Metals – Gold Rises 2% on Decline in Dollar and US Treasury Yields

(Update on closing, wording change and author signature)

By Brigish Patel

(Reuters) – Gold rose 2% to a nearly one-month high on Wednesday, as declines in the dollar and US Treasury yields boosted safe-haven demand for the metal.

* Spot gold rose 1.8% to $1,791.41 an ounce at 1813 GMT, while US gold futures rose 2% to $1,794.70.

* Other precious metals also rose. The spot price of silver rose 2.5 percent to $ 23.09 an ounce, platinum rose 1.2 percent to $ 1019.54, and palladium rose 3.5 percent to $ 2116.68.

* “Gold is tracking returns at the moment. The initial reaction to the CPI data was a significant spike in yields, which is now beginning to fade,” said Danielle Pavilonis, market strategist, chief RJO Futures.

Gold initially pared its gains when 10-year Treasury yields crossed 1.6% after data showed US consumer prices rose sharply in September and are heading for a further rally in the coming months.

* However, the subsequent decline in yields, which lowered the opportunity cost of holding non-interest bearing gold, led to a sharp rise in precious metals.

* The metal also benefited from a weaker dollar and fear of the impact of high inflation on global economic growth.

* “Inflation expectations mixed with concerns about global growth have many investors worried who believe that business and consumers will be much weaker in the second half of 2022. Safe haven flows are beginning to flow into gold.” Edward Moya, a senior market analyst at OANDA Brokerage, said in a note.

(Reporting by Arundhati Sarkar and Sohir Darin in Bengaluru; Editing in Spanish by Marion Giraldo and Javier López de Lleida)